So you're basically calling further rate cuts?
RBA to cut another 1%?
- Thread starter unloadmymind
- Start date
So you're basically calling further rate cuts?
further rate cuts by RBA even down to 0% now would not be surprising at all.
Given the deteriorating fundamentals of the economy and not much being done about fixing the budget and government spending, that's probably what the RBA can do to try and help.
Anyways FIFA soccer matches were fixed, LIBOR were fixed. The AUD traders probably know what's going on with the future RBA rate cuts given the very accurate market reactions before the announcements recently.
Given the deteriorating fundamentals of the economy and not much being done about fixing the budget and government spending, that's probably what the RBA can do to try and help.
Anyways FIFA soccer matches were fixed, LIBOR were fixed. The AUD traders probably know what's going on with the future RBA rate cuts given the very accurate market reactions before the announcements recently.
Would be interesting to see an Aussie Quant Easing = RBA printing more money and buying billions of government debt as long as inflation permits.
It seems to have worked in America and Britain.
Then Parliament can pass a law forgiving the debt.
Sings:
"ooooh; another point two-five we go, a point two-five we go, la, la, le, la, la la; a point two five we go..."
I didn't say it's gonna fall by 1%. That's how tabloid journalism works, put a controversial figure and the put a question mark on it. Who knows it could fall by 1.25% even. But clearly the RBA easing cycle is not over, that's my point. More cuts to come! But I won't be surprised if data evolved to a point where a 1% cut is required as we enter into a recession.
Still, people who fail to accept possibilities of lower rates (eg retirees reliant on interest income) only have themselves to blame for sticking their heads in the sand ignoring the lower rates for longer and instead hoping it will get higher just because it's currently low. No, it could go lower!
Ok that's all very interesting.
As I say, every boom lots of experts come on to tell us it'll go on forever or it's all going to end soon. Everytime both have been wrong.
All this theory is great, but I guess more importantly, what's the next best conviction trade then?
And the second question would be are we, as Warren Buffett says, driving in a Rolls Royce and taking advice from an investment banker who is catching a bus to work?
As I say, every boom lots of experts come on to tell us it'll go on forever or it's all going to end soon. Everytime both have been wrong.
All this theory is great, but I guess more importantly, what's the next best conviction trade then?
And the second question would be are we, as Warren Buffett says, driving in a Rolls Royce and taking advice from an investment banker who is catching a bus to work?
I agree entirely. Rate cutting probably isn't over, APRA will put a lid on house prices while the RBA is free to stimulate business/investment.
When tabloid journalism raises it's head here I think it's right to robustly debate it. There are some here who regard SS as a haven from the garbage that appears in the tabloids (inc business spectator).
Except maybe Bill Evans' Weekend Economist articles on Bus Spectator.
He's pretty level headed and has been errily accurate with his rate predictions over a few years now.
This the concluding couple paragraphs from this weekends article.
Based on the current economic situation the RBA is likely to cut by 0.25% some time in the next 10 months.
However, based on the last cut not being passed on in full (by most) & the fact that the big 4 banks earnings growth has stalled it is highly unlikely that all of it will be passed on to plebs like us.
IMO the RBA will cut by 0.25%, the banks will pad their margins and we'll be left with the ~0.15% cut & there'll be a bit of hand wringing by the tabloids for a week.
Agree, I have a lot of respect for his views. Although its his Westpac Weekly Bulletin is reproduced by BusSpec - he isn't an employee of theirs.
Bill Evans was one of the first in 2014 going against the crowd to predic cuts in 2015. Indeed it happened.
The other economists were saying it's gonna go up, the next move is up (perhaps they think it's too low it cannot go lower). Same with my broker last year trying to convince me to fix my rates because it's never gonna get lower.
Thankfully I read the Capex, UE, CPI and GDP releases seriously. When I analysed the data, there's no reason for rates to go up -- rather it's gonna go down contrary to what the results were of the rates survey among economists.
The other economists were saying it's gonna go up, the next move is up (perhaps they think it's too low it cannot go lower). Same with my broker last year trying to convince me to fix my rates because it's never gonna get lower.
Thankfully I read the Capex, UE, CPI and GDP releases seriously. When I analysed the data, there's no reason for rates to go up -- rather it's gonna go down contrary to what the results were of the rates survey among economists.
Rate cuts? Better start loading up more properties
Re; mortgage brokers asvising fixed rates
In the current climate its not due to a belief rates will go lower
Its merely self interest on their behalf
In a market thats hot like Sydney with some people flipping instead of holding the brokers lose their commissions.
Fin institutions have claw back arrangements with brokers if the loan gets paid off in in a certain period of time theg will clawback the commission
So brokers now try lock people into fixed to weed out the flippers
In the current climate its not due to a belief rates will go lower
Its merely self interest on their behalf
In a market thats hot like Sydney with some people flipping instead of holding the brokers lose their commissions.
Fin institutions have claw back arrangements with brokers if the loan gets paid off in in a certain period of time theg will clawback the commission
So brokers now try lock people into fixed to weed out the flippers
Agree and disagree with you.
A good broker will advise you appropriately with future vision to get more and more loans via releasing client equity when appropriate so they can continue property shopping. Fixing some loans might be a part of the strategy, but a good broker will leave you with options.
A short sighted broker will go for the 'quick fix' for 2-3 year fixed and get the upfront commission and then hope you stay and continue with a new loan application. Clients are more inclined to walk.
I think saying brokers 'weeding out clients' by just fixing loans is a pessimistic mindset and not shared by all.
pinkboy
Hi unloadmymind,
Would you mind sharing the websites/sources that you follow to read up on Capex, UE, CPI and GDP releases ?
What key points do you usually note when analyzing the data ? i.e what key factors would influence a rate cut or increase etc ?
Many thanks for sharing.
Would you mind sharing the websites/sources that you follow to read up on Capex, UE, CPI and GDP releases ?
What key points do you usually note when analyzing the data ? i.e what key factors would influence a rate cut or increase etc ?
Many thanks for sharing.
There are a few in this site that have a very sharp opinion on Economics and sometimes post,,but where they miss the roundabout of the whole collective of investors sideline soap box speakers, they can't predict what individuals think and investment trends because every time one does they all follow that lead with explosive consequences..
www.abs.gov.au
If it looks like a cliff, it probably is a cliff
Also you may want to read about the RBA Board's psychology by reading their quarterly Statements on Monetary Policy.
http://www.rba.gov.au/publications/smp/2015/may/html/index.html
See if their economic projections are still valid when subsequent data is released by the ABS. For example last year when the GDP was released after the November RBA meeting, it was a catastrophic result and was worse than the RBA forecast. So the RBA reevaluated their forecasts downward in the next SMP release (Feb). It would have been awkward for them not to cut rates when they are saying the GDP will be worse than expected. So indeed they cut the rates in Feb.
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